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Opinion | Hardly Anyone Talks About How Fracking Was an Extraordinary Boondoggle


In the energy scramble sparked by Russia’s invasion of Ukraine, America’s liquid natural gas has so far served as Europe’s white knight. If Europe keeps its lights on, heating homes and factories running this winter, when energy demand is at its highest, it’s largely due to US gas shipments, which have more than doubled since then. since the war started. Today, two-thirds of America’s oil and even much of its gas comes from the process of hydraulic fracturing, also known as fracking, which has played this heroic role before, in the long-term of the country after 9/11 to get out of lockdown. of Middle Eastern producers and guarantees what is often described as “energy independence”. (Donald Trump likes the term “energy dominance.”) It doesn’t turn out to be quite as helpful as you might think: Because energy prices are set in global markets, domestic production doesn’t mean people America pays less for the pump. But thanks in large part to fracking, the United States has become the world’s largest producer of oil and gas.

Yet perhaps the most striking truth about America’s hydraulic fracturing boom, minus the most discriminating consumers of energy news: Fracking has, for most of its history, been, is a losing money game that has only turned in profits recently, after being backed by so many venture capital and Wall Street investments that it’s more like a no-brainer market, and more like like a speculative bubble empire like Uber and WeWork. America’s shale revolution has given the country “energy independence,” anything of value, and more oil and gas. It has indeed reshaped the entire geopolitical landscape for fuel, though not enough to strip leverage from Vladimir Putin. But the revolution was not primarily the result of some market breakthrough or a technical innovation that allowed the industry to print cash. From the beginning, cash moved in the other direction; The revolution happened just because a huge amount of money was poured into the project to make it happen.

Today, with profits backed by last year’s spike in energy prices, the fracking industry is finally, at least for now, profitable. But between 2010 and 2020, US shale has lost $300 billion. Prior to that, from 2002 to 2012, Chesapeake, the industry leader, had not reported a single positive cash flow, ending that period with a total loss of about $30 billion, as Bethany McLean documents. in her 2018 book, “Saudi Arabia.” and the most thorough coverage of the fracking boom to that point. Between mid-2012 and mid-2017, the 60 largest mining companies lost an average of $9 billion per quarter. From 2006 to 2014, mining companies lost $80 billion; in 2014, with oil prices at $100/barrel, which seemed to promise a large sum of money, they lost $20 billion. These losses are massive and consistent, adding up to a total that “eclips anything in the tech/VC sector in that timeframe,” as Bloomberg writer Joe Weisenthal recently pointed out. . “There are all these stories written about how VCs subsidize the millennial lifestyle,” he noted on Twitter. “The real story that will be written is about the massive subsidies to consumers from all the Chesapeake sponsors and all the companies that lost money over the last decade.”



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